US Housing Market Still Stalled

The NAHB builder confidence survey released today in the US points to a continued lack of confidence from home builders.

Unchanged from previous month

Builder confidence remained unchanged from the previous month at 13, the lowest since March 2009. According to the news release on the National Association of Home Builders web site

"Neither the component gauging current sales conditions nor the component gauging sales expectations in the next six months budged in September from their low readings in the previous month, holding at 13 and 18, respectively. The index gauging traffic of prospective buyers edged down a single point, to 9."

A reading above 50 indicates that more builders see the market as good than see it as poor, the reading has not been above 50 in over 4 years, the last time being in April 2006.

Departing from reality

In the minutes following the release of the NAHB builder confidence survey stock indexes surged up 0.5%, with the S&P 500 presently sitting at 1137 after shooting up from from 1128 just minutes before the announcement. On the surface of it you would have expected this news to be at best neutral to stocks and at worst perhaps create a slight fall, however in a complete departing from reality stocks have surged in what looks on the surface to be clearly some sort of market manipulation. It's little wonder Small Investors have been exiting the market in their droves as covered in depth in this article by Graham Bowley published by The New York Times August 21, 2010.

Uncertainty increases

"In general, builders haven't seen any reason for improved optimism in market conditions over the past month," noted NAHB Chairman Bob Jones, a home builder from Bloomfield Hills, Mich. "If anything, consumer uncertainty has increased, and builders feel their hands are tied until potential home buyers feel more secure about the job market and economy."

FOMC tomorrow

With a statement from the Federal Open Market Committee due tomorrow and major stock indexes globally sitting on or just below resistance it will be interesting to see what news that brings and whether indexes will break resistance and run upward or has today's news and subsequent manipulation of the market just been to suck in the long positions prior to an announcement from the FOMC that will see the market reverse and head lower again, only time will tell.